5 money management tips beyond investments

Money management is not limited to making investments; it is overall management of your financial profile. Finances are integral part of your personal life. Whether it matters to you or not but still if your finances are in mess then you cannot stay away from stress for long.

Though investments are important but to get the best in your personal finance, you should follow the below mentioned money management tips to the core

1. Involving Family members in the process:

Money means different things to different people. Future of every stakeholder in the family be your kids, spouse or parents lies on how well the limited finances of the family is getting managed. Money also has different use for different members. Your wife wants to have enough to take care of routine house expenses, you may want to have enough to go on vacation every year, and you want to provide best possible education to your kids and also for safe, secure and comfortable retirement. You all have your own and some common lifestyle expenses.

The point is that it is not about you only. It is about complete family. So why not to involve the complete family in the process? After all without their understanding and involvement all planning and management may go haywire.

House expenses constitute major and important portion in your budget which needs to be on track to have a regular enough surplus for your desires and goals. Your Children has to understand the value of money and hard work as without which no savings is enough for them. Besides this the insurances that you buy is of no use if you cannot ensure the proper distribution and usage of the funds if at all gets claimed sometime.

Where is all the money invested in? Where are the documents lying? What is the financial plan of the family? Who to contact for what?…and many more such questions are required to have answers with your family members, if you are truly serious on money management.

2. Always ask “why” while using money:

“Why money is important to you?” Ask self, to your family members and you will get many deep rooted emotional answers coming from Hope, excitement and fear. This question will help you understand, why you spend, save and for what and whom.

Why did you buy this mobile phone? You have enough clothes in your wardrobe then why did you spend so much on last month’s online sale? Why do you want to spend so much on kid’s marriage? Why have you invested in or sold out a particular product? Why do you have so much insurance policies?…and so on. If you don’t know about “why” then you tend to spend haphazardly and invest aimlessly and carelessly. ( Also read: Respect your money)

This “WHY” will take you more close to your Goals and make you understand what is more important in life.

Keep yourself growing, not only in terms of money but spiritually and emotionally too. Never stop learning. This will keep your employability intact in today’s kind of unsteady job environment and also keep you fit enough to face any adversity in life.

Learning new things will open new avenues of work to you, help you in networking and meet new people which may benefit you socially or professionally in long term.

As success is a factor of time and efforts you put in, so you should not stop doing the efforts. Invest some money for self, keep learning new things…so you need not be worried about the inflow or retention of money into your financial system…even in case of any eventuality.

4. Understand time and money exchange.

Every day you make exchanges between time and money. You give your time to your work to get money. Then you use that money to buy quality time with self or family like in the restaurant, on vacations etc. Sometimes you spend your money on things like clothes, phone, car, gadgets, showpieces etc. which may be your need or want. All these are required in your view for a comfortable living.

You buy products on loan, which may also mean that you are in a hurry or you have less time or you want to have that thing in less time. In this way you exchange more of your money for that time. And to earn that money you have to devote more time to your work.

Let’s first give monetary value to your time. If you get Rs 50000 as monthly salary, that means your hourly earning comes out as Rs 240 (for 24 working days of 8 hours each). You go to restaurant and spend Rs 2000, which means that you have spent almost a day of your work on that food. You go on vacations and spend Rs 50000 there, which indirectly means that you have spent your whole 1 month over there.

You invest to have enough money in future, so you can enjoy sufficient time with self and family. By investing, you are taking advantage of others time who generates money for you. By engaging with professionals like financial planners, Chartered accountants, you borrow there time and skill for your financial well being. You may also learn their skills but you sometimes find convenient and better to get them in, so you can send your time on other important work which may be your family, your skills upgrading …etc.

The point is to make you understand money’s worth with reference to time. Both are limited resources. You need to use and exchange wisely to make the most of it.

5. Plan your finances holistically:

Money management or financial planning is not about single goal, single person or single investment…it’s is about your financial life. Everyone of us do some sort of financial planning in life, like saving for future, buy insurances, Investing for goals etc. but what lacks is a structural approach.

Investing is fine, but where should you invest? how much should you put in? which insurances and how much of cover do you require? does it make sense to mix investments with insurance? How your investment products will affect your tax profile ? how easily your assets can be distributed with in your family members…and so on are some of the issues that needs to be answered.

Buying pension plan does not mean your retirement planning is over. Or child insurance plans are enough to fund your child education. Also you need to provide for emergencies, health problems, job loss and other uncertain expenses. You need to prioritize the things and save for your important goals first and for that you have to have holistic view of your finances i.e. your income, expenses, assets, liabilities. Playing around with products to make money in short term, may bring excitement in life but that excitement does not last for long.

Conclusion:

Just like a business house works and grows, so should your personal finances be managed. When you have monthly and quarterly target in your job, you fill your goal sheet every year and work towards achievement of that, why can’t you do that in your personal life which matters most. I am sure following the above mentioned points will definitely bring good in your financial life.

Good Moneying!!

Do share your feedback in the comments section. I would also love to hear your personal money management tips.

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He’s MBA ( Finance) gold medalist, a CERTIFIED FINANCIAL PLANNER and SEBI Registered Investment adviser. An ex banker , having a decade long experience in financial services industry he manages clients across the globe. He is a regular contributor to various leading Media and publication houses. He keeps on writing for Moneycontrol, Dainik bhaskar, Business standard etc. He also delivers training on Various personal finance topics to various corporate houses. You may get in touch with him at [email protected]

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Manikaran Singal is the founder and Chief financial planner at Good Moneying Financial Solutions. He is a CERTIFIED FINANCIAL PLANNER CM and SEBI registered Investment adviser (Regd no. INA 100001620). He’s having more than 12 years of experience in financial services space. More...